A couple of years post demonetization in India has shaped the real estate sector to accustom to the numerous compliances that would guarantee quality construction delivered to the homebuyers. The new reforms implemented have brought about an essential change in the tax, regulatory and business environment in India.
More importantly, the introduction of RERA (Real Estate Regulatory Authority) and GST (Goods and Services Tax) has resulted in more transparency in the real estate sector. Such policies have the power to reshape the Indian real estate sector for a long term and considering the positive aspects, there is a big possibility that 2019 is going to be the bumper year for the Indian realty market. Following are the trends that are expected in the new year in the Indian Real Estate market.
1. Global Capital Flow
Investment by global investors in the country has increased, and that shows a significant sign of revival in the Indian Realty Sector. The World Investment Report 2016-17 by the United Nations Conference for trade and development stated that India has been ranked fourth concerning FDI inflows, showing keen interest by the foreign buyers and investors in the Indian markets. The transformation of the regulatory framework and the addition of new policies are to be credited for making India an attractive and accessible destination for both global and Indian investors.
The Economic Survey of India reported in 2017 that Indian Real Estate sector attracted a total Foreign Direct Investment of USD 257 million in the second half of the same year. The global capital flow grew with positive numbers in 2018, and 2019 is expected to be a revolutionary one.
2. Increasing Demand for Housing
Housing demand in the country has mostly remained quite high, due to its ever-growing population. The growth is such that there is still an estimated shortage of around 40 million houses combining urban and rural. Along with population growth, the rise of the nuclear family concept and improved lifestyle in India has resulted in more demand for housing especially in urban areas of the country. Hence, most of the property developers are focused on catering luxury to mid-level housing developments.
3. Developers are Likely to Revamp their Business Models
The lack of strong regulations of the Indian property sector previously resulted in the delay of property delivery or at times no guarantee from the developer's end. In recent times, with the enactment of RERA Act (in 2016), developers have revamped their business models and are serious about the deadlines and completion of the projects. Such ethics in the business allow more transparency and accountability which further benefit the developers. Such deep-rooted reputation will encourage more and more domestic and foreign investors into the Indian market, which will inevitably result in higher and sustainable demand in the long run.
4. The Commercial Market is the Game Changer
One of the significant leaders of the property sector has turned out to be the commercial real estate. Various reforms including RERA, REIT, demonetization, GST, make in India have given a list of positive shots to this market. The commercial office market with the introduction of REITs (Real Estate Investment Trusts) has already started bouncing back in Mumbai, Bangalore, Delhi, and Pune. The REIT potential in India is huge and is acting as a sure-fire growth catalyst. The rise of numerous startups in Indian markets has made its way to the increasing demand of co-working space culture in India. Co-working spaces are growing mostly across metros as well as Tier-II cities. The demand for commercial office space is also due to improvement in industrialization and trade opportunities, and with recent changes in FDI policy, demand for warehousing industry is expected to increase many-folds in 2019.
5. The Contribution of Tourism and Hospitality
Tourism in India is always a big revenue generator and one of the main GDP contributors to the Indian economy. This growth is seen in the various form of tourism such as religious, business and medical. All of this will contribute to the higher growth of the hospitality industry. As a result, more International and domestic hotel and hospitality investors have started investing, and 2019 will be a witness to the massive growth.